In the last fifteen years, the Internet has become a powerful marketing and distribution channel for businesses. Instead of simply relying on traditional means of marketing and distributing their product and services, businesses may now utilize the Internet to reach a huge customer base with relative ease. One innovation that has enabled this paradigm shift is the online deal. The online or group buying deal is facilitated by deal providers, which are companies specializing in the marketing and distribution of deals on products and services of business (in particular small and medium sized businesses, or SMBs).
Deal providers provide, through a website, deals on products and services of business to consumers that may redeem these deals within a certain timeframe (e.g. a year). For example, a deal provider may partner with a SMB (e.g. a yoga studio) to offer a deal on a service (e.g. a session of yoga at the yoga studio). In return for offering the deal to the customer base available to the deal provider, the deal provider may take a percentage of revenues that are generated by the deal (typically 50%). The deal will be structured in such a way that new customers may be introduced to the SMB (i.e. customers that otherwise may not have ever known of the existence of the SBM without the deal). The group buying portion of a deal includes an activation threshold for a number of customers to purchase a deal. In other words, if a certain number of customers do not buy the deal, the deal may not become “active”. Deal providers, through the use of deals, have become a major new marketing and distribution channel for SMBs.